Why businesses need a ‘chief human capital officer’

The debate around HR being on the board has raged for some time, but I think it is high time we moved it on. Instead of assessing whether HR deserves a seat at the top table, I believe more organisations should introduce the role of chief human capital officer (CHCO) in recognition of the evolution of HR’s role, and the contribution it makes to the business.

There are already a number of group HR directors who could loosely be labelled CHCOs, given their remit and forward-looking mindset. CHCOs, by definition, would have a board role, and would be accountable for signing off a human capital report much as a chief financial officer signs off the organisation’s financial report.

I would like to think that HR professionals would view this development positively as a way of raising the profile of HR in general. It is neither a rebadging exercise, nor an example of ‘role inflation’ without further accountability/responsibility. On the contrary, it is a serious attempt to acknowledge the increasing complexity of organisations and people management. It is also an acceptance that effective management of people does make a difference to organisational performance.

Given the importance of people relative to other inputs in many organisational business models (public and private), it is mystifying as to why there is such little board representation of HR. There are a number of reasons for this case but, for me, there are three that stand out: management expectations perceived capability and the tenuous HR link to performance. In essence, it’s about HR leadership.

The CHCO role would be a way of raising the ‘leadership profile’ and associated authority of HR through having an impact on the areas I mentioned. The role would be very much strategic and proactive in terms of governance, policy, organisation architecture and performance, productivity, risk, measurement and reporting.

It is true that many organisations can be described as ‘chaotic’, but that does not mean HR functions spend their entire lives being reactive, armed only with some form of sweeping brush. Swapping a brush for a compliance rulebook is no answer, either. But the increasing use of data analysis to provide an insight into people/organisational performance and business intelligence could be used to define the more proactive elements of a CHCO role.

For too long, traditional HR has not readily embraced the opportunity to measure its performance or look beyond the confines of transactional HR activities. And it is easy to be ensconced in operational matters, convincing ourselves that we add value by primarily ‘firefighting’ through hard work and endeavour. Ambition in HR seems to be in short supply and I often wonder how, as a profession, we will attract good quality candidates in the future.

Having an effective CHCO would benefit the HR function by making it more dynamic, and would help move it away from the traditional ‘silo’ approach.

As a result, HR departments would be regarded as more flexible, instead of being ‘static’ or ‘boxed’, which are terms often used to describe the profession.

However, the CHCO role should at least be subject to the demands of the ‘duck test’ – ie, if it walks and talks like a duck, it most probably is. Thus, any CHCO would be identified with what they said, how they acted, and what they did.

The logic of the CHCO role – and its impact regarding profile, remit, competency, capability, importance and aspirational qualities – makes it difficult to argue against.

For those who are yet to be convinced, my organisation is already working with a FTSE100 company in profiling the CHCO role. In other words, it is already happening. But this development has far broader implications. And given the various opportunities and challenges, the emergence (or not) of the CHCO will, to a large degree, determine the future direction and capability of the HR function.

By Nicholas Higgins, chief executive, Valuentis

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